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Central Question and Underlying Research  Central question: How do different arrangements of corporate governance impact the development of work systems, in particular forms of work organization that favour high-road jobs?  Research project (together with Inge Lippert) carried out 2009/2010 financed by the Hans-Böckler-Foundation  Company level interviews in the automotive supplier industry. Three companies each in Germany, Sweden, USA.  Theory perspective: Path theory, Varieties of Capitalism 2 Publications: Lippert, Inge, Tony Huzzard, Ulrich Jürgens and William Lazonick (2014): Corporate Governance, Employee Voice, and Work Organizations: Sustaining high-road jobs in the automotive supply industry, Oxford University Press.

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5 Findings: Capital Market buffered (Type I) Companies No change of path in the Corporate Governance System, endogenously driven change High continuity of corporate governance actors (owners, management, labor representatives); Resources are used for reinvestment. Investment in long-term skill development of employees was not reduced. Management remuneration and bonuses lower than in listed stock companies and based on long-term development criteria.

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6 Findings: Capital Market buffered Companies - continued … but isomorphous adaptation processes The companies adopted strategies and modes of behavior which are similar to the ones of type II companies:  Increased profitability expectations and use of financial indicators (EBIT and ROCE) also used by market-listed companies.  Incentive systems (systems of management payment) are adapted to the systems of market-listed companies.  Adoption of so called „best practice“ strategies (off-shoring into low- wage countries, benchmarking with ‚best practices‘, restructuring of value-added chains etc.)

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Findings: Capital Market exposed (Type II) Companies 9 Changes of path and transformation with new strategies, new goals and new actors. Increasingly „impatient capital“ in the ownership structures. The shareholders are mainly institutional investors. Radical restructuring measures: closure of plants in peripheral areas, opening of new plants in core areas of competence, aggressive strategies concerning relocation to low-cost countries, thereby undermining the model of long-term employment, also in the European companies. The goal of shareholder-value maximization is accompanied by shareholder friendly policies aiming at a redistribution of ressources in favour of the shareholders. The change of course towards a shareholder- value model went along with complete exchange of personnel in management and of corporate governance institutions. High bonuses induce the management to prioritize short-term shareholder interests.

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10 Interest representation Work systems Ger_stock  Differentiated and established system of co-determination  „Concession Bargaining“ (employment security commitment as a means to enforce cost reduction)  Shareholder value orientation weakens co-determination practices  No roll back of “qualified team work“  Skill development on the „high road“ Sweden_stock  Considerable weakening of the system for the representation of union interests  No representation of employees on the board  Moves towards an adversarial model of industrial relations  Pushing aside of „good work“ by Toyota production system  Qualification on the „low road“  No committment to employment security (hire and fire) US_stock  Strengthening of labor voice through a crisis deal  New strategic partnership with UAW  A union representative in the board  Participation of unions on the local level (Co-Management)  Strengthening of team orientation through HPWP with taylorist features  Investment in skills in order to improve product quality  New standards of employment security (UAW has to agree to layoffs, encouragement of union organized plants etc.) Summary of Findings on individual Type II Companies

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Findings: Private Equity financed (Type III) Companies 11 Abrupt change of path Exchange of personnel in central management positions and in corporate governance institutions, determined by the private equity investor. Development of a mid/long-term plan, describing goals and activities of the turnaround process. The implementation of the measures is evaluated by the investor. Far reaching restructuring processes: in some cases even relocation of the entire production to low-wage countries and fast growth by acquisitions. Measures to increase the cash flow, for example selling real estate and machinery which have to be rented back (expensively).

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General Findings 13  The differences between the types of companies are bigger than the ones between nations. The positioning vis à vis capital markets is the central variable explaning different path developments.  Instances of a re-alignment with the national model are observable in some cases (US_insider, Sweden_equity). The changes of CG in type II companies were however firmly established.  Interactions between the elements of the institutional system are not just caused by changes in the ownership structure. They can also be caused by changes in the system of employee participation.  In cases of weak interest representation the impact of financialization is clearly observable (private equity financed companies, Sweden_stock)  A strong representation of worker interests however can countervail „low road“ developments (Ger_stock)